Saturday, January 28, 2023

How Binance Dominates The Bitcoin And Crypto Market

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Since the collapse of FTX, once the second-largest exchange by trading volume, the crypto landscape has fundamentally changed, and it should come as no surprise to many that Binance has emerged as the big winner from the situation. Vetle Lunde, senior analyst at Arcane Research has published a detailed analysis of this.

“No matter how you look at it in terms of trading activity, Binance dominates the crypto market,” the analyst says, further stating that the exchange led by Changpeng Zhao is the clear winner of 2022.

As the Arcane Research analyst notes, Binance captures 92% of the Bitcoin spot volume. Remarkably, the exchange occupied only 42% of BTC spot volume in January 2022. After the exchange removed trading fees on its BTC spot pairs this summer, the growth exploded.

“We have to go all the way back to Mt. Gox’s heydays to find a period where a single exchange dominated in a similar fashion,” Lunde claimed.

Binance’s Bitcoin spot volume ratio in 2022

Binance’s Dominance Increased Across The Board

But not only the spot volume but also the perp volume puts Binance in a different league than all other crypto exchanges. According to Arcane Research, the exchange is responsible for 66% of the global perpetual swap volume of all cryptocurrencies. OKX with 16% and Bybit with 13% are trailing far behind on the next ranks.

CZ’s exchange also represented 55% of perp trading volume until November, but after the collapse of FTX, more or less all of the perp trading market share was taken by the exchange, leading to rapid and prevalent growth in market dominance, Lunde says.

global perpetual swaps volume
global perpetual swaps volume

With 49%, Binance is not much less dominant in global perp open interest, followed by Bybit with 23% and OKX with 20%. Similar to volumes, the exchanges’ dominance has gained the largest market share following the collapse of FTX.

Binance also holds a whopping 61% of Bitcoin perp and futures volume. This makes the dominance for BTC almost as large as for all crypto perps. Remarkably, the exchange’s market share has grown steadily throughout the year. However, it is striking that “more or less all of the market share” flowed to the exchange in November following the collapse of FTX.

Bitcoin futures and perps volume / Binance dominance
Bitcoin futures and perps volume dominance

In contrast, Binance’s dominance is less pronounced when it comes to the open interest of BTC perps and futures, where the exchange is responsible for 30%, followed by OKX (24%), Bybit (19%), and the CME (16%). “Nonetheless, Binance has been the market leader throughout the year maintaining a market share of 25-35% of the OI in BTC derivatives,” Lunde explained.

Apart from these stats, Binance has been able to gather other achievements in 2022, according to Arcane Research’s senior analyst. BUSD gained market share in the stablecoin industry (from 11% to 14%) and BNB outperformed BTC and ETH by a wide margin.

Moreover, Binance continued to grow its employee base while the entire industry was forced to lay off workers. As Lunde explained, the exchange was able to double its headcount while others laid off half their workforce or went bankrupt.

Meanwhile, the BNB price weakened over the past few weeks after numerous rumors about Binance worried investors. At press time, the price stabilized at $243.90.

Binance BNB USD 2022-12-30
BNB price, 4-hour chart

Featured image from Binance.com, Charts from Arcane Research and TradingView.com

Numisteamone

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